Banking

Amex, Capital One report strong quarterly profits

Capital One CEO says consumer loan charge-offs have probably peaked

By

AlistairBarr

SAN FRANCISCO (MarketWatch) -- American Express and Capital One Financial reported strong quarterly profit late Thursday as the giant credit-card companies benefited from an economic recovery that stemmed loan losses.

Amex shares climbed 1.6% to $47.50 in after-hours trading, while Capital One jumped 6.2% to $48.35.

Amex said first-quarter net income came in at $885 million, more than double the result from a year earlier when the credit-card giant made $437 million. Net income attributable to common shareholders was 73 cents a share in the latest period, versus 31 cents a share in the same period a year ago. Revenue, after interest expense, came in at $6.61 billion versus $5.93 billion a year earlier.

Amex
AXP, -0.81%
was expected to make 62 cents a share, according to the average estimate of 18 analysts polled by FactSet.

Capital One said first-quarter net income came in at $636.3 million, or $1.40 a share. The company reported a net loss of $172.3 million, or 44 cents a share, a year earlier.

The credit-card and banking company
COF, -0.71%
was expected to earn 55 cents a share, according to analysts polled by FactSet.

"Charge-offs in our consumer lending businesses likely peaked in the first quarter," Capital One Chief Executive Richard Fairbank said in a statement. "We are well-positioned to ramp up our businesses as we emerge from the recession."

"Credit metrics also continued the improvement that began in the second half of 2009," Kenneth Chenault, chief executive of Amex, said in a statement.

Amex said provisions for loan losses were $943 million in the first quarter, down 48% from a year earlier.

Capital One's provision expense fell by $368.6 million compared to the previous quarter, driven by lower charge-offs and an allowance release of $566 million.

Total charge-offs in the quarter fell as improvements in the company's commercial, auto finance, and retail banking businesses more than offset a slight increase in domestic card charge-offs, Capital One reported.

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